Lg Marketing Project

A PROJECT REPORT ON MARKET ANALYSIS OF LG CONSUMER DURABLES & DEALER DEVELOPMENT In the partial fulfillment of  requirement for the award of degree of 

MASTER OF BUSINESS ADMINISTRATION (MBA) From Dr. Babasaheb Ambedkar Marathwada University, Aurangabad Submitted By

Pratap P. Ingle Roll No. 0815023

Under The Guidance of 

Ms. Pradnyashailee Sawai

MGM’s Institute of Management (IOM), N-6, CIDCO, Aurangabad. 1

DECLARATION

I, the undersigned, hereby declare that the project report on The Market Analysis of LG Consumer Durables & Dealer Devlopment is submitted to the ‘MGM’s Institute of Manage Manageme ment, nt, CIDCO, CIDCO, Aurang Aurangaba abad’. d’. It is my origi origina nall work and the conclusions drawn there in are based on the data & material collected by myself.

Date: -

Pratap P. Ingle

Place: - Aurangabad

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ACKNOWLEDGMENT

 The successful completion of this project report could not have have been been poss possib ible le with withou outt the the help help and and guid guidan ance ce of  many many peo peopl ple. e. I woul would d like like to expr expres ess s my si sinc ncer ere e and and deepest sense of gratitude to all of them.

I am deeply indebted to my project guide Ms. Pradnyashailee Sawai for her valuable guidance for my project.

It gi give ves s me immens nse e pl ple easu asure to acknowl nowle edge dge LG Electr Electroni onics cs India India Ltd. deal deale ers, rs, who have ave bee been nic ice e enough to give me a chance to do my project and providing me wonderful support throughout my project. I sincerely thank Dr. S.A.Somwanshi (Director, MGM IOM) whose direction and encouragement motivated me to steer the project work confidently and successfully.

CERTIFICATE

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 This is to certify that the project report on The Market Analysis of LG Consumer Durables & Dealer Devlopment submitted by Pratap Ingle is the result of  his original research work completed under our supervision. To the best of our knowledge & belief the work work embo embodi died ed in this this proj projec ectt repo report rt has has not not form formed ed earlier the basis for the award of any degree or similar title of this for any other examining body.

Ms. Pradnyashailee Pradnyashailee

Mr.Goutam Saha

Dr. G.A. Nikam

Sawai

Project Guide

Dean (Academics) (Academics)

Academics)

Date:Place:-

INDEX

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Director (Research (Research &

SR. NO.

1.

SUBJECT

INTRODUCTION

PAGE NO.

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OBJECTIVES

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SCOPE

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REASERCH METHODOLOGY

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LIMITATIONS

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2.

REVIEW OF LITARATURE

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3.

PROFILE OF THE COMPANY

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4.

CRITICAL ANALYSIS

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5.

SUMMARY

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FINDINGS

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SUGGESTIONS

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BIBLIOGRAPHY

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QUESTIONNAIRE

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INTRODUCTION Before the liberalization of the Indian economy, only a few companies like Kelvinat Kelvinator, or, Godrej, Godrej, Allwyn, Allwyn, and Voltas Voltas were the major players in the consumer durables market, accounting for no less than 90% of the market. 5

Sony, Samsun Samsung, g,   Then, Then, after after the liberal liberaliza izatio tion, n, foreig foreign n player players s like like LG, Sony, Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players cont contro roll the the majo majorr sh share are of the the consu consume merr dura durabl bles es marke market. t. Cons Consum umer er durables market is expected to grow at 10-15% in 2009-2010. It is growing very very fast fast beca becaus use e of rise rise in livi living ng stan standar dards ds,, easy easy acce access ss to consu consume merr finance, and wide range of choice, as many foreign players are entering in the market With the increase in income levels, easy availability of finance, incr increa ease se in cons consum umer er aware awarene ness, ss, and intr introd oduc ucti tion on of new new mode models ls,, the the demand demand for consum consumer er durabl durables es has increas increased ed sig signif nifica icantl ntly. y. Produc Products ts like like wash washin ing g mach machin ines es,, air air cond condit itio ione ners rs,, micr microw owav ave e oven ovens, s, colo color r televisions (CTVs) are no longer considered luxury items. However, there are are sti still very very few few play player ers s in cat categor egoriies like like vacu vacuum um clean leane ers, rs, and and dishwashers Consumer durables sector is characterized by the emergence of  MNCs, MNCs, exchan exchange ge offers offers,, dis discou counts nts,, and intens intense e compet competiti ition. on. The market market share of MNCs in consumer durables sector is 65%. MNC's major target is the grow growin ing g midd middle le clas class s of Indi India. a. MNCs MNCs offe offerr su supe peri rior or tech techno nolo logy gy to the the Consum Consumers ers wherea whereas s the Indian companie companies s compet compete e on the basis of firm firm grasp of the local market, their well-acknowledged brands, and hold over wide distribution network. However, the penetration level of the consumer durables is still low in India.

Global Operation LG Electronics is playing an active role in the world market with its assertive glob global al busi busine ness ss poli policy cy.. As a resu result lt,, LG Elec Electr tron onic ics s cont contro rols ls 11 110 0 loca locall subsidiaries in the world with around 82,000 executive and employees. LG Group 1. LG.Philips LCD 2. LG Chemical 3. LG Telecom 4. LG Powercom 5. LG Twins 6. LG Dac

Business areas and main products Mobile communications (a) CDMA Handsets, (b)GSM Handsets, (c) 3G Handsets, 6

(d) Cellular Phones Digital appliance a) Air Conditioners, b) Refrigerators, c) Microwave Ovens, d) Washing Machines, e) Vacuum Cleaners, f) Home Net, g) Compressors for Air Conditioners and Refrigerators Digital display a) Plasma TVs, b) LCD TVs, c) Micro Display Panel TVs, d) Monitors, e) PDP Modules, f) OLED Panels, g) USB Memory, h) Flat Panel Computer Monitors Digital media a) Home Theater Systems, b) DVD Recorders, c) Super Multi DVD Rewriters, d) CD±RW, e) Notebook PCs, f) Desktop PCs, g) PDAs, h) PDA Phones, i) MP3 Players,  j) New Karaoke Systems, k) Car Infotainment

LG INDIA LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January 1997 after clearance from the Forei Foreign gn Invest Investmen mentt Promot Promotion ion Board Board (FIPB) (FIPB).. LG set up a statestate-ofof-the the art Greater r Noida Noida,, near near Delhi, Delhi, in 1998 1998, with an manufacturi manufacturing ng facility facility at Greate investment of Rs 500 Crores. 7

LG corp corpor orate ate offi office ce is loca locate ted d at Plot Plot no.5 no.51, 1, Udyog Udyog Vihar Vihar,, Kasna Kasna Road Road,, Greater Noida, India. This facility manufactured Color Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. ''Company is setting up a chain of exclusive premium showrooms. LG plans to launch 60 premium Brand Shoppes by the end of the first quarter of this year. At present, LG has a total of 83 LG stores across the country, of which 45 are shops and 38 are exclusive stores. Brand shops will be placed in the premium segment and the target audience will comprise buyers interested in premium and high end products. LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a more interactive environment and additional lifestyle orientation on display so that the customer can actually experience the LG products in his or her own home settings. LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract inspirational and young consumers across India, company will roll out a new marketing strategy. The exercise will cost the company Rs 360 crore. LG Electron Electronics ics Indi India a is the the fast fastes estt grow growin ing g comp company any in the the consu consume merr electronics, home appliances, and computer peripherals industry today. LG Electronics is continually providing, superior technology products & value for money to more than 50 lakh households in India. LGEIL is celebrating the 11th anniversary this year. LG Soft India the innovati innovation on wing wing of LG Electr Electroni onics cs in Bangal Bangalore ore is LG Electronics' largest R&D centre outside Korea. We at LGSI focus on niche techno technolog logy y areas areas such such as mobil mobile e applica applicatio tion n develo developme pment, nt, digita digitall video video broadc broadcast ast and biomet biometric rics s softwa software re and suppor supportt LG Electr Electroni onics cs with with our expertise. Motivated by a passion for technology, a strong work culture and loyalty to the organization, we are determined to see LG become one of the top three brands globally. Prominent consumer electronic company, LG Electronics Inc. has said that it expects the sale of its products in India to up by 15 per cent in 2008. Moon Bum Bu m Shin Shin,, mana managi ging ng dire direct ctor or of LG Elec Electr tron onic ics s Indi India a has has said said that that the the company has earmarked 4.8 billion rupees for investment purpose in India this year. The said money will be used to market as well as manufacture new products. LG Electronics, which is originally a South Korean Company with branch in India, informed that its sales of GSM mobile phones, color televisions, air conditioners and other household goods in the Indian market was to the tune of 95 billion rupees ($2.4 billion) in 2007. As per Shin's estimate, the sales in 2008 would be around 110 billion rupees. In order to achieve its target, Shin said LG Electronics will concentrate on catering to the high-end consumer 8

market which will help boost sales this year. India churns out six (6) per cent of LG Electronics global revenues of $42 billion. The Indian branch of LG exports to 40 countries.

Classification of consumer durables sector •

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Consumer electronic include vcd/dvd, home theatre, music player, color television (CTVs), cameras, camcorders, portable audio, Hi-Fi, etc White goods include dishwashers, air conditioners, heaters,washing machines, refrigerators, vacuum cleaners, kitchen appliances, nonkitchen appliances, microwaves, built-in appliances, Tumble dryer, personal care product etc. Moulded luggage include plastics Clocks and watches Mobile phones

OBJECTIVES OF THE PROJECT

Primary objective •

 The main objective of filed survey during the project was to find out the market share of the LG and also calculate the display share. 9

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Find out the positional dealer who can sale the LG product in large volume.   The main objective of research was to identify potential dealer and development these dealer. So LG can make them their direct dealer.  This will ease the dependence on the some big dealer like Maharashtra and Mahaveer electronics. Find out the problem faced by the dealer in sales and the distribution.

Secondary objective •

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 The Objective was to find out that how far the exhibitions are helpful in branding, While While purcha purchasin sing g the consum consumer er durabl durables es which which parame parameter ter is most most important for the consumer? Do the consum consumers ers prefer prefer the financ financial ial facili facility ty for buying buying consum consumer er durable? How frequently consumers change the consumer durable?  To enhances the knowledge of consumer durable market.  To increases the knowledge consumer durable product of LG.  To enhances the knowledge about the marketing and branding N activity.

SCOPE OF THE PROJECT   Thi This s proj projec ectt give gives s us grea greatt expo exposu sure re to the the cons consum umer er durab durable le marke markett becaus because e it includ includes es produc productt knowle knowledge dge and field field survey survey job in which which we visite visited d the LG stores stores in Pune. Pune. Incide Incidental ntally ly Gudipa Gudipadav dava a time time was nearin nearing g during our survey period which exposed us to another aspect of product promotion. LG always insist the 50% display share of LG product because LG believes that “JO DIKHTA HAI WO BIKTA HAI” . 10

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In term of purchasing power parity (PPP), India is the 4th largest economy in the world and overtake Japan in the near future become the 3rd largest. Indian consumer durable market is expected to reach $400 billion by on 2010 India has the youngest population amongst the major countries. There are lot of people in the different income categories nearly the two third population is below the age of  35 and nearly 50% is below 25.  There are 56 million people in middle class, who are earning us$4,400-US$21,800 us$4,400-US$21,800 a year. And there are 6 million rich household in India.  The upper-middle and high-income household in urban areas are expected to grew to 38.2 million in 2007 as against 14.6 million in 2000.

RESEARCH METHODOLOG Y  Research methodology is considered as the nerve of the project. Without a proper well-organized research plan, it is impossible to complete the project and reach to any conclusion. The project was based on the survey plan. The main objective of survey was to collect appropriate data, which work as a base for drawing conclusion and getting result.   There Therefor fore, e, resear research ch method methodolo ology gy is the way to systema systematic ticall ally y solve solve the research problem. Research methodology not only talks of the methods but also logic behind the methods used in the context of a research study and it explains why a particular method has been used in the preference of the other methods 11

Research design Research design is important primarily because of the increased complexity in the market as well as marketing approaches available to the researchers. In fact, it is the key to the evolution of successful marketing strategies and programmers. It is an important tool to study buyer’s behavior, consumption patt patter ern, n, brand brand loyal loyalty ty,, and and focu focus s marke markett chang changes es.. A rese resear arch ch desi design gn specif specifies ies the method methods s and proced procedure ures s for conduc conductin ting g a parti particul cular ar study. study. According to Kerlinger, “Research Design is a plan, conceptual structure, and strat strateg egy y of inve invest stig igati ation on conc concei eive ved d as to obta obtain in answ answer ers s to rese researc arch h questions and to control variance.

Data collection methods After the research problem, we have to identify and select which type of data is to research. At this stage; we have to organize a field survey to collect the data. One of the important tools for conducting market research is the availability of necessary and useful data.

Primary data: For primary data collection, we have to plan the following four important aspects. Sampling Research Instrument Secondary Data - The Company’s profile, journals and various literature studies are important sources of secondary data. Data analysis and interpretation • • •

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LIMITATIONS

Every study has certain limitations. In our study, also there were certain limitations, which I could not able to solve. •

 The research was conducted in a very small area.

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Our Our rese researc arch h work work peri period od witn witnes ess s the the bigg bigges estt ups ups and and down downs s in product sale of different brands, which affected the perception of the customer. This was biggest drawback of my study.   Time factor was also important for us. We had limited time for the research, for which a full-fledged report was insufficient for me.  The customer filled the questionnaire mostly in careless manner, so it was difficult to make them hold for time. We had had only only foun found d the the uppe upperr-mi midd ddle le clas class s fami family ly to fill fill up the the questi questionn onnair aire, e, but genera generall lly, y, an average average middle middle class class family family was required for the study.  The sample size is also very small which represent my research on consumer behavior

REVIEW

OF LITERATURE

 The increasing spread and domination of international brands has seemed inevit inevitabl able e for at least least the last last 30 years. years. Invest Investors ors have historic historicall ally y been been extrem extremely ely confid confident ent about about the prospe prospects cts for branded branded goods goods busine businesse sses, s, particularly those owning international brands like LG . And the multinational branded goods owners themselves have shared that confidence. With their econ econom omie ies s of sc scal ale, e, mass massiv ive e sp spen endi ding ng powe powerr and and high highly ly deve develo lope ped d management structures, these behemoths have seemed invincible. Multin Multinati ational onals, s, in pursui pursuitt of the global global brand, brand, have have rationa rationaliz lized ed irrati irrational onal name variants –In the last few months, LG has changed the name of its 13

leading cleaning brand in the Korea but local and regional brands still remain strong.  The multi-layered multinationals simply don’t have the agility and speed to respond to local needs in every country of the world in the way that locally grounded brands do. Nimbler, smaller competitors, who are solely focused on thei theirr home home mark market ets, s, can adap adaptt more more quic quickl kly. y. None None of this this has has gone gone unnoticed by global brand owners. It could be argued that the downfall of all local brands is that they have ambitions to be global brands. It is clear that the fortunes of both global and local brands will wax and wane with new fash fashio ions ns,, new new gove govern rnme ment nts s and and new new tech techno nolo logy gy esp. esp. in the the case case of  multinationals like . Perhaps, though, the question we really should be asking is what global and local mean in the new economy. Most virtual Internet brands brands are effect effective ively ly transn transnati ationa onal. l. The word word ‘global ‘global’’ in our market marketing ing vocabularies for some time now and that very coining seems to recognize that global and local brands need each other. In the end people want both glob global al and and loca locall bran brands ds – bran brands ds that that make make them them feel feel part part of wide widerr international community and brands that root them in their home culture as done by LG worldwide.

TERMS AND CONCEPTS USED: Global Marketing Strategy: How companies position themselves in different companies and how customers perceive the value and authenticity of their brand name and prod produc ucts ts is majo majorl rly y what what a mark market etin ing g strat strateg egy y focu focuse ses s on Glob Global al Marketing strategies become increasingly important within a modern global global compan company. y. No firm firm compet competing ing region regionall ally, y, or worldworld-wid wide, e, can afford to pursue marketing strategies that are based solely on national char charact acter eris isti tics cs or pote potent ntia ials ls.. To su succ ccee eed d in thes these e situ situati ation ons, s, the the market marketing ing effort effort must must consid consider er all global global aspect aspects s of the compan company’s y’s mark market etin ing g effo effort rt and and its its comp compet etit itor ors. s. Comp Compan anie ies s must must deve develo lop p char charact acter eris isti tics cs that that,, comp compar ared ed with with natio national nal,, regi region onal al and and glob global al compet competito itors, rs, genera generate te advant advantage ages s in the market market place. place. Market Marketing ing resour resources ces must must also also be effect effective ively ly alloca allocated ted in line line with with strate strategic gic objectives. •

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Global Success Factors: A comp compan any’ y’s s many many attr attrib ibut utes es form form to make make the the comp company any a majo majorr success. These major strategies and core competencies of companies make up its global success factors.

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Global Advertising: 14

Global advertising depends on the culture, value and beliefs of the coutry coutry where where the company company wants wants to place place its itself elf.. For For example example in Pakistan the advertisements are way different than they would be in china or in Australia or in any other country for that matter. •

Mediums for Advertising Another major part of global branding is mediums for advertising. It depe depend nds s a lot lot on tech techno nolo logi gica call pote potent ntia iall of coun countr trie ies s wher where e the the company company is doing its operations. operations. Electronic-me Electronic-media, dia, bill boards, boards, print media and many more mediums are used for this purpose.

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Brand awareness Brand awareness is a proof of company’s success. It relates to how customers know about the brand and respond to it. Later in this report a brand awareness survey has been carried out to make the concept clearer.

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Competitors analysis Its is very important important for for companies companies to carry out this this analysis to know know their position in the market and to analyze how they can make it better for for them themse selv lves es to impr improv ove e on thei theirr prod produc uctt and and mang mange e to have have a competitive edge over their competitors

PROF ROFIL ILE E OF THE COMPAN COM PANY  Y 

MISSION

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The mission of LG is to provide the customers with utmost satisfaction satisfaction through leadership. The fundamental policy of  development is to secure product leadership that the Customers may have the utmost satisfaction. satisfaction.

VISION Global Top 3 by 2010 Global Top 3 Electronic/Telecommunication Electronic/Telecommunication company

GROWTH STRATEGY  “Fast innovation, Fast growth”

CORE COMPETENCY  “Product leadership, Market leadership, People leadership”

CORPORATE CULTURE No excuse, “we” not “I”, Fun workplace SLOGAN

"Life's Good" represents LG's determination to provide delightfully smart products that will make your life good.

THE SYMBOL

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  The symbol of LG is the face of future. The letter “L” and “G” in a circle symbolizes world, future, youth, humanity & technology. LG philosophy is based on humanity. It also represents LG’s efforts to keep close relationship with our customers around the world.  The symbol consists of two elements. 1. The logo in LG gray 2. The stylized image of human face in the unique LG red color.

Red color represents our friendliness and gives a strong impression of LG’s commitment to deliver the best.  The circle symbolizes The Globe. The stylized image of a smiling face in the “Friendliness and Approachability Approachability”. symbol conveys “Friendliness

“Goal-or -orien iente ted, d, Focuse Focused d &   The The one one eye eye on the the sy symb mbol ol repr repres esen ents ts “Goal Confident”. The slogan of LG is “Lif expres esse ses“ s“ Bran “Life’s e’s Good Good”. It expr Brand’ d’s s Valu Value e , Promises, Benefits , Personality .

History of the company   The The compan company y was origin originall ally y establ establish ished ed in 19 1958 58 as Gold Gold Star, Star, produc producing ing radios, TVs, refrigerators, washing machines, and air a ir conditioners.

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1958-69

- GoldStar The Electronics Industry Dream

1970-79

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1980-88

- INTERNATIONALIZATION

1989-94

- INOVATION

1995-98

- GLOBAL LEADERS LG ELECTRONICS

1999-03

- DIGITAL MANAGEMENT

2004-06

- GREAT PEOPLE GREAT DESIGN

2007

- THE PEOPLE COMPANY

GoldStar symbol of The Technolgoy

  The LG Group was a merger of two Korean companies, Lucky and Gold Star, from which the abbreviation of  LG was derived. The current "Life's good" slogan slogan is a backro backronym nym.. Before Before the corpora corporate te Name change change to LG, household prod produc ucts ts were were sold sold unde underr the the Brand Brand name name of  Lucky, whil while e electronic products were sold under the brand name of  Gold Star. The Gold Star brand is still perceived as a discount brand. In 1995, Gold Gold Star was rena rename med d LG Elec Electr tron onic ics, s, and and acqu acquir ired ed Zeni Zenith th Elec Electr tron onic ics s of the the Unit United ed States. 18

LG BRAND IDENTITY   The brand of LG is delightfully smart. LG strives to enhance the customer’s life life and and life lifest styl yle e with with inte intell llig igen entt feat featur ures es,, inst instit itut utiv ive e func functi tion onal alit ity y and and exceptional performance.

The brand platform  The LG brand is composed of four basic elements – 1. Value 2. Promise 3. Benefits 4. Personality The Brands core Value that never changes. a. Trust, b. Innovation, c. People d. Passion  The benefits that are consistently delivered to the customer includes a) Relia Reliable ble produc products ts b) Simp Simple le desi design gn c) Ease Ease of us use e d) Extrao Extraordi rdinary nary Experie Experience nce Person Personali ality ty descri describes bes the human human charac character terist istic ic that that are expres expressed sed to the customer throughTrustworthy, ConsideratePractical, Friendly

The Internal Culture of LG LG practices four cultures 1. Learn Learnin ing g Cult Cultur ure e 2. Boundar Boundary y less less Enviro Environme nment nt 3. A Carr Carrie ierr 4. Growth

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According to LG, the Learning Culture continuously helps the employee to learn more and more to develop the habit of continuous learning.

Boundary less Environment means that there is no difference between the levels of employees. There is transparency between the work and mutual understanding between all the employees. A carrier is highly growing in LG and one who is the employee can develop their their carrier carrier largely. largely. A new comer will feel fully comfortable comfortable in the company and for a new comer the company is very helpful in the overall growth of  personality. Growth in LG is very high for those who are in the company and for those who want to join in LG. The company is growing with fast innovation and the BLUE Ocean strategy is one of the examples of growth.

Product Leadership We are focusing on six development areas to become the product leader. 1. New Machine 2. Reliability 3. Conventional Installation 4. Environment Friendly Product 5. Low Noise & Vibration 6. Energy Savin

Quality Innovation   The The poli policy cy of qual qualit ity y assu assura ranc nce e is to prov provid ide e cust custom omer ers s with with utmo utmost st satisfaction by supplying zero defects.

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LG proceeds in a hierarchal manner. It is named as “LG WAY”. From top to bottom: No.1 LG – is the VISION

Managementt is LG’s LG’s unique unique applic applicati ation on to ethics ethics.. LG will will “ Jeong-DO” Managemen succeed through fair management practices and constantly developing our business skill. A) Honest with our customer b) Providing great values to customer through constant innovation & and development. c) Equal opportunities d) Equal Treatment Treatment Management Principle Principle - Creating value for customer customer

Code of conduct of LG 1. Responsibi Responsibility lity and obligatio obligations ns to customer customers s: Respect for Customers Creating Value Providing Value • • •

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2. Fair Fair compe competi titi tion on Pursuit of Free Competition Compliance with Laws and Regulations • •

3. Fair Fair Tran Transac sacti tion on : Equal Opportunity Fair Transaction Procedure Support and Aid for Business Partners 4. Basic Ethics for Employees Basic Ethics Completion of Duty Self Development Fairness in Performance Avoidance of conflict with company interest • • • • •

5. Corporate Responsibilities to employees Respect for human dignity Fair Treatment Promoting Creativity • • •

6. Responsibilities to society and country Rational Business Development Protection of stock holder interest Contribution to social development Environmental Conservation • • • •

DISTRIBUTION AND MARKETING

  The The comp compan any y has has numb number er of deal dealer ers s and and ware wareho hous uses es.. They They have have LG exclusive shops. For the marketing of the products a number of activities are followed 1. Exhibitions Exhibitions are are conducted conducted from from time time to time. time. 2. Society Society and colleg college e activitie activities s are conduct conducted. ed.

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3. Hoarding, Hoarding, Posters, Posters, banners banners are used so as as to grab the attent attention ion of the costumers. 4. Day to day advertisem advertisement ent in leading leading newspaper newspaper.. 5. Discou Discount nt at festi festival val tim time. e. 6. For dealer dealer relationship relationship they they arrange dealer dealer meeting meeting at several several time time in the year 7. LG divide divide dealer dealer in gold silver silver etc. catego category ry to know know the perfor performan mance ce of the dealers. 8. They They have have thei theirr sale sales s pers person ons s at vari variou ous s su sub b deal dealer er stor store e and and at mord morden entt trade trade stor store e for for parti particu cula larl rly y for for the the prom promot otio ion n of the the LG product. 9. LG also uses uses the radio radio FM for the promot promotion ion activitie activities. s. 10. Provide capon and scratch card for festive season.

Innovative marketing strategy Launch new technologies in consumer electronic and home appliances. LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world cup followed it up in 2003 as well. LG broug brought ht in four four capt captai ains ns of the the Indi Indian an cric cricke kett team team to endo endors rse e its its produc products. ts. LG invest invested ed more more then then US$ 8 milli million on on adverti advertisin sing g and marketing in this sport. LG has differentiated its product using technology and health benefits. CTV has “Golden eye technology” Air conditioner has “Health air system” and microwave ovens have the “Health wave system”.

Local and efficient manufacturing to reduce the cost  To overcome high import duties LG manufactures TV refrigerator in Indi India a at manuf anufac actu turi ring ng faci facili lity ty at Noid Noida a and and . LGEI LGEI had had alre alread ady y commissioned contract manufacturing at Mohali Kolkata and Bhopal for CTVs. CTVs. This This has helped helped LGEI LGEI to reduce reduce cost. LGEI LGEI implem implement enting ing the “Digital manufacturing system” (DMS) as the cost cutting innovation this system is follow-up to the six sigma exercise LGEI had initiate earlier. Regional channel and wide distribution distribution network  1. LG has has adop adopte ted d the the regi region onal al dist distri ribu buti tion on chan channe nell in Indi India. a. All All the the distr distrib ibut uter ers s work work dire direct ctly ly with with the the comp compan any. y. This This has has resu result lted ed in quicker rotation of the stock and better penetration into B, C, D, class market. 2. LG also follows follows the stock stock rotation rotation policy policy rather then dumping dumping stock stock on channel partners. 23

Product localization 1. Product Product localizati localization on is the key key strategy strategy used by the the LG 2. LG came out out with with Hindi and and regional regional language language menus menus on its TVs. TVs. 3. Introd Introduce uced d the low-pri low-priced ced “Cinepl “Cineplus” us” and “Sampoo “Sampooma” ma” for the rural market. 4. LG was the first first brand to introduce introduce gaming gaming in TVs in continuat continuations ions of its association with cricket LG introduce cricket game in CTVs

THE LOGISTICS Logi Logist stic ics s is the the art art and sc scie ienc nce e of mana managi ging ng and cont contro roll llin ing g the the flow flow of  goods, energy, information, and other resources like products, services, and people, from the source of production to the marketplace. It is difficult to accomp accompli lish sh any market marketing ing or manufac manufactur turing ing withou withoutt logist logistica icall support support.. It invo nvolves lves the the inte ntegrat gratiion of infor nform matio ation, n, tran transp spor orta tati tion on,, inve invent ntor ory, y, warehousing, material handling, and packaging. The operating responsibility of logi logist stic ics s is the the geog geograp raphi hica call repo reposi siti tion onin ing g of raw mate materi rial als, s, work work in process, and finished inventories where required at the lowest cost possible. Logi Logist stic ics s Mana Manage gem ment ent is that that part part of the the su supp pply ly chai chain, n, whic which h plan plans, s, implements and controls the efficient, effective forward and reverse flow and storag storage e of goods, goods, servic services es and relate related d inform informati ation on betwee between n the point point of  origin and the point of consu sum mption in order to meet customers' requirements. 5R’s of Logistic followed by LG: Right Time Right Place Right Condition Right Cost Right Handling • • • • •

 The LG Factory is located at NOIDA & . There are three types of  WarehouseMother Warehouse Branch Warehouse Spare part warehouse  The mother warehouse warehouse is that where the products from the factory factory are kept and from that warehouse, the products are sent to the branch warehouse. A warehouse warehouse is a commerci commercial al building building for storage storage of goods. Warehouses Warehouses are used us ed by manu manufac factu ture rers rs,, impo import rter ers, s, expo export rter ers, s, whol wholes esal aler ers, s, trans transpo port rt businesses, businesses, customs, etc. They are usually usually large plain buildings in industrial industrial areas of cities and towns. They come equipped with loading docks to load • • •

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and unload unload trucks; trucks; or sometime sometimes s are loaded directly directly from railways, railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.

In ware wareho hous use, e, the the prod produc ucts ts are are pinu pinup p with with 3-co 3-colo lorr pape paperr to get get the the knowledge about the delivery. 1. Red Card – To stop the product going into market, 2. Green card – To allow the product for delivery in market, 3. Yellow Card – After the product labeled with green, allow this to move in market

DEALER MANAGEMENT Mapping of regional dealers. They have been divided into three categories on the basis of their turnover and the selling capacity.

1 2 3 1- Includes the modern trade and they have direct billing from the branch office. They have high turnover and the company depends heavily on them 2- Includes the distributor distributors. s. They have direct direct billing billing from the branch office.  Their turnover is also high. 3- Includes the sub dealers. They have direct billing from distributors or from the branch office. Their turnover is not so high, but there are few sub dealers whose potential is quite high. According to sales the branch has designated as gold and silver sub dealers.

CRITICAL ANALYSIS I have made questionnaire No. of questions in questionnaires for customer: 07 No. of question related to LG product: 03 No. of people met during the research: 200 25

No. of respondents during the research: 50

Sample unit Professionals, Business man, Employees, House wife, Working women, Students

Q1. Have you purchased any consumer durable during Exhibitions?  Yes No • •

Inferences 1. 65 % of Cust Custom omer ers s have have not not purc purchas hased ed any consu consume merr durab durable le from exhibitions. 2. Only Only 35 % people people have have purcha purchased sed.. 3. It shows that consume consumers rs are coming coming in the exhibition exhibition for knowledge knowledge of  product product and also they want to know that weather there is actual price difference in exhibition and shop or not. 4. Cons Consum umer ers s also also want want to comp compar are e to the the diff differ eren entt bran brand d whic which h are are available in the exhibition. 5. So exhibitions exhibitions are more more useful to increas increases es brand awareness awareness.. 6. People People are less interested interested to purchase purchase product product from the exhibition exhibition.. Q.2 While purchasing consumer durable which parameter influences you? Price Product feature Brand Service Durability • • • • •

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Inference 1. 30% of customer gives importance to price. So it shows that Indian consum consumers ers are very very price price sensit sensitive ive.. They They give give more more import importanc ance e to price over the brand. 2. 26% give give importance importance to to brand. So price price and Brand Brand matter matter a lots lots for the costumers. And they are also want best brand in best price. 3. 19% to product product feature feature Service Service 16% 16% and durability durability 9% Service Service is also a big factor for the customer they are a re less interested in the durability.

Q3. From where you prefer buying consumer durables dura bles ? Exhibitions Co.shoppee Showroom • • •

Inference: majori rity ty of cust custom omer ers s pref prefer er to buy buy from from sh show owro room oms. s. Very Very less less 1. A majo proposition of customers buys from Exhibitions. 2. 47 47% % cust custom omer ers s are are prefe preferr to by from from the sh show owro room oms s beca becaus use e the the showro showrooms oms are more more conven convenien ientt to custom customers ers they they also also think think that that these shops give more discounts.

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3. People People are less intereste interested d to buy from the exhibitio exhibition n they only visit the exhibition for price quotation of the product and the comparison of the product.

Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of following reasons Attractive Price Service Demonstrations Offers • • • •

Inference 1. Customers buy from rom showroom ooms because of the service and and convenience. These are two main factors. 2. Custom Customers ers are preferr preferred ed to buy from the showro showroom om because because of they think that these convenient store may provide good after sell service. 3. Custom Customer er also thinks thinks that there there is more more chance to bargain bargain and they can get more discounts in these showrooms. 4. Price also also a factor that attract attract the the customer customer in these showroo showrooms. ms.

Q.5.Which consumer durable you have and of which brand? CTV LCD PLASMA REF WM MW • • • • • •

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AC

Inference In CTV section maximum customers have Onida, in LCD Sony is the leader, In plasma BPL is the leader, In Ref LG is the leader, MW LG is the leader. In WM there are companies and in AC also. Q.6. How frequently you change your consumer durables? 1-3 years 3-5 years 5-10 years More than 10 years • • • •

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Inference 1. Custom Customers ers prefer prefer to change change consum consumer er durables durables within within 5-10 5-10 years. years. In India people do not change consumer durable frequently. 2. 23% customer customers s do not change their their consumer consumer durable durable within within 10 year. year. 3. It repr repres esen entt that that Indi Indian an cons consum umer er do not not pref prefer er to chan change ge thei theirr consumer durable frequently.

Q.7.Do you prefer any financing scheme to purchase consumer durables?  Yes No • •

Inference Majority of customers do not prefer any financial scheme

SUMMARY  Indian Consumer durables market used to be dominated by few domestic players like Godrej Voltas Allwyn and Kelvinator. But post liberalization many foreign companies have entered into Indian market dethroning the Indian player players s and domina dominatin ting g Indian Indian market market the major major catego categorie ries s being being CTV, Refrigerators, Refrigerators, Air Conditioners and Washing Machines. India being the second largest growing economy with huge consumer class has resulted in consumer durables as the fastest growing industries in India. LG, SAMSUNG 30

the two Korean companies have been maintaining the lead in the market with LG being leader in almost all the categories. The rural market is growing faster than the urban market, although the penetration level is much lower .The CTV segment is expected to the largest contributing segment to the over overal alll grow growth th of the the indu indust stry. ry. The The risi rising ng inco income me leve levels ls doub double le-i -inc ncom ome e fami famili lies es and and cons consum umer er awar awaren enes ess s are are the the main main grow growth th driv driver ers s of the the industries. Consumer durables major LG Electronics India Pvt Ltd will invest nearly Rs 500 crore in India this year in research and development, brandbuilding building and other marketing marketing initiatives. initiatives. The company, company, having a turnover turnover of  Rs 9,500 crore and market share of 26 percent, is investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140 crore on research and development, besides launching new platforms in information techno technolog logy y and relate related d areas, areas, LG’s LG’s innovat innovative ive ‘211 ‘211 campai campaign’ gn’ to provid provide e quality after-sales service, will also be expanded from the existing 22 to 40 cities by next month, the campaign, for which IT infrastructure has been set up, includ includes es the company company’s ’s respon response se to custom customer er compla complaint int withi within n two two hours. The fixing time for complaints complaints varies from one hour to a maximum of  24 hours.

TODAY  Consumer durables sector is characterized by the emergence of  MNCs, MNCs, exchan exchange ge offers offers,, dis discou counts nts,, and intens intense e compet competiti ition. on. The market market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the LG, SAMSUNG the two Korean companies has been maintaining the lead in the industries with LG being leader in almost all the categories.  The company, having a turnover of Rs 9,500 crore and market share of 26 per cent, is investing Rs 360 crore on brand-building and other marketing initiatives and around Rs 140 crore on research and development, besides launching new platforms in information technology and related areas.

DEALER SURVEY FINDINGS

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By calculating the display share we found that in most of store LG has 50% display share almost all categories.

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By the actual monthly sale of particular store we came to know the capacity of the store and how much product can they sale. It helps us to know that weather dealer is capable of being a direct dealerof LG or not and it also helps to find out the new dealer who are capableof being the dealer of LG. We also came to know while visiting the shops that there was big problem of after sale service. Many dealers were facing the problem of after sale service because there is no follow up calls from LG. Demo calls also not done properly.  The top competitor of LG product in is SAMSUNG. In area the performance performance of LG is in better better position but the competitor also hold closer margin.   The There re is high high grow growth th of sale sale in mark market et due due to boom boomin ing g in new new technology and better service. Word of mouth plays a vital role in awareness among customer. This is one factor, which can play a good role in promotion of products as well as demonstration given by the shopkeeper also plays a vital role for customer.

RECOMMENDATIONS AND SUGGESTIONS

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LG should improve it’s after sale service because its hits badly LGs market share in region. 32

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More detailed customaries service is to be provided.

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 The training to in shop demonstration should be given at frequent time interval and feed back should be considered positively.  The company should look into the matter of person hiring for in shop demonstration. A big LG showroom should have at least 2 such kind of  person. LG should try new dealer who have the potential. So they can target more market. As there is a bottle neck competition between Samsung and LG, it is necessary necessary to take measure steps to overcome the area of downfall in LG with respect to Samsung.   The marketing managers should make better relations with dealers and reputation of the company. Customer considers quality as their first preference, so the company should give more stress on this.  The switching of customer from LG product to other brand is due to the bed after sell service in shop.   The product is well aware and it is on top of mind of customer. So company should always improve services and update their technology.

CUSTOMER SURVEY FINDINGS

Secondary supports play an important role in the customers mind and create create awareness awareness among the customers. customers. The secondary support includes Demonstration, Exhibition & Even Sponsors. •

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From the survey it was found out that the majority of customers don’t don’t buy consum consumer er durabl durables es from from exhibi exhibitio tions. ns. They They just just visit visit the exhibitions to see the co. latest model.  They want to buy from the showrooms or from co. showrooms. For them them servic service e is import important ant .Besid .Beside e conven convenien ience ce and other other factor factors s service is key factor. Also majority of customers do not want any financing scheme for purchasing the durables.   There was heavy rush on weekends so large numbers of ISD’s were appointed that day. Also the live demo calls helps in selling. Exchange offers also generate sale. Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand. In survey we found that LG has captured maximum market share in every every catego category. ry. LG domina dominates tes CTV, CTV, LCD, LCD, and Refrig Refrigera erator, tor, and Washing machine, category. LG and Samsung Samsung have bottle bottle neck neck compet competiti ition on in TV and REF. category.  The product is well aware and it is on top of mind of customer. Customers are also now very choosy in buying the product and it is important for the company to make loyal customer of their brand. •

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RECOMMENDATIONS AND SUGGESTIONS

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Exhibitions do not help to generate so much sells but they should be conducted regularly. This helps in generating awareness regarding the product in customers which ultimately helps in sales.

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Also Also it is help helps s in adve advert rtis isin ing g for for the the new new prod produc ucts ts.. Like Like in this this exhibition new LCD SCARLET was advertised. Company should always focus on service. Display share should be increased where there is less than 50% as LG also believes that “JO DIKHTA HAI WO BIKTA HAI”. Comp Compan any y sh shou ould ld try try to impr improv ove e serv servic ice. e. No doub doubtt the the comp compan any y products have technically edge over competitors but in long run it may hamper the company’s profit. Company should concentrate more on its major drivers LCD, IT, and GSM. Branding and promotions should be done effectively as it creates a long lasting image in the mind of customers. Company should also cater to the needs of sub dealers as some of the sub dealers have potential of high sales.

BIBLIOGRAPHY  • • • • •

Business world Business today LG magazine Economics times News paper  Times of India 35

WEB SOURCES • • •

www.lgindia.com www.google.com www.wikipedia.com

CONSUMER SURVEY QUESTIONNAIRE Q1. Have you purchased any consumer durable dura ble during Exhibitions?  Yes No Q.2While purchasing consumer durable which parameter para meter influences you? Price Product feature Brand Service Durability Q3. From where you prefer buying consumer durables Exhibitions Co.shoppee •

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Showroom Q.4.You prefer to buy from the same as you have mentioned in Q.3 because of following reasons Attractive Price Service Demonstrations Offers Convenience Q.5.Which consumer durable you have and of which brand? CTV ------------------LCD ------------------PLASMA ------------------REF ------------------WM ------------------MW ------------------AC ------------------Q.6. How frequently you change your consumer durables? dura bles? 1-3 years 3-5 years 5-10 years More than 10 years Q.7.Do you prefer any financing scheme to purchase consumer durables?  Yes No •

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